8 Reasons to Integrate Payroll with 401(k) Administration
401(k) retirement savings plans are a highly valued employee benefit, and offering one can help your business attract and retain top talent. Like payroll processing, however, 401(k) plan administration is characterized by rigorous legal and fiduciary requirements. Small companies, in particular, may not have staff members who know how to manage retirement plans.
By engaging your payroll vendor in administering your small business' retirement plan, you gain the benefit of its expertise, technology, and reliability while streamlining the tasks associated with both functions. Here are eight reasons to integrate payroll and 401(k) administration:
- Collection of accurate employee census data – Retirement plan providers usually require complete census data on employees to track eligibility and plan entry dates. By integrating your 401(k) administration with payroll, this task becomes significantly easier.
- Time and money savings – Outsourcing your 401(k) administration to your payroll provider frees staff to focus on your core business.
- Confidence that you’re in compliance – 401(k) recordkeeping is heavily regulated. By outsourcing to a national payroll provider, which is typically staffed with experienced professionals with expertise in tax services, data gathering and application, and fiduciary guidelines, you gain a partner that can help you remain in compliance.
- Peace of mind – Sleep easily knowing that your employees' money will be deducted and transmitted promptly and securely.
- Reduced paperwork – By automating the transmission of contributions and the collection of required data, you can drastically reduce paperwork for your staff.
- Data security – Well-established firms use the latest technology and are equipped to handle large volumes of transactions and funds.
- Timely investment of employee 401(k) contributions – Because the payroll provider already processes workforce funds, they are able to quickly and easily add the necessary retirement plan deductions.
- Familiarity with your business – Your payroll provider already knows your company and the needs of its workforce, so it is uniquely positioned to handle your company’s 401(k) administration as well.
Don't let the fear of heavy administrative burdens deter you from offering a benefit that can give your company a competitive edge in hiring. As the executive director of retirement policy at the U.S. Chamber of Commerce said, "If plan sponsors are expected to handle all of these tasks internally, there would be significantly fewer benefit plans."